The comparison shows that unlike last time none of the Indian companies could win the bid this time. Also, the competition was significantly lesser this time. That probably explains why solar energy tariffs are higher this time. The previous auction for 500 MW solar power capacity which saw an oversubscription of 3.2 times. The latest auction of 700 MW was oversubscribed by only 1.79 times indicating that the intensity of competition was lesser in the latest auction. The solar tariffs are also high due to solar park charges.

Solar tariffs under INR 3 is a new norm lately

Following the introduction of GST and safeguard duty in last and current financial years respectively INR 3 is the new cap on solar energy tariffs. India was hoping to breach INR 2.44 but that did not happen. Twice the tariffs have just touched the lowest either because the market had absorbed the GST impact or due to the pass-through provision of safeguard duty in the tender document.

In the calendar year 2018 the solar energy tariffs trend in India have been like this:

Source: SolarDae Research

Tenders were often cancelled in 2018 whenever they were over INR 3. Meanwhile, the central government also put an upper cap on solar energy tariffs. For project developers, these are signs that the government, in any case, wants to keep tariffs under INR 3. Therefore no matter what if they want to keep their chances of winning up they have to keep the tariffs at Sub-3 levels.

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Post Author:
Ankur Kumar Jha

Founder SolarDae || MBA Power Management || B.E (Mechanical)

Ankur analyses mainstream media coverage of renewable energy in general and solar in particular; he tracks the ongoing development of regulations and policies and incorporates them in his opinion. He can be reached at +91-8860726731 for any assistance in rooftop solar and utility-scale projects.